Super, scheme “imperfect”

Press, Volume CXIII, Issue 33418, 27 December 1973, Page 8

Super, scheme “imperfect”

Most people did not understand how complicated the Government’s superannuation scheme was. nor did they realise how imperfectly it achieved the goals claimed for it by the Minister of Finance (Mr Rowling), the chairman of the Life Offices’ Association (Mr S. R. Ellis) said yesterday.

“There are a number of unrealistic requirements in the; j scheme, such as that new Alternative schemes must have a higher contribution rate,; and that transfer values can be received by the proposed corporation but not paid out of it. Furthermore, no details' have been given of how ex-, penses will be calculated and charged.” said Mr Eilis. “Likewise, the fact that there is nothing for the 250.000 pensioners who are in need now, the fact that those over the age of 55 would, we believe, be relucitant to join the scheme in iany event, and the fact that 'those with an inadequate; earnings record, particularly! I women, will not receive reasonable pensions, are all points that need to be much more widely understood,” he said. Mr Ellis said Mr Rowling's concern for the 750.000 employed persons who were not in superannuation schemes was misplaced. “His proposed scheme will do absolutely nothing for the additional 750.000 or so adults who are not in the work force. The first concern one would have thought of a Government sympathetic to the needs of the dependent sections of the community should be for the 250,000 people over the age of 65 who need improved pensions ,/iow, and who will receive

absolutely nothing from the proposed scheme.’’ Mr Ellis said the Life Offices’ Association had made positive proposals, one of which was for an immediate tax of 2 per cent on wages and salaries and an immediate increase of 30 per cent in social security pensions. “Mr Rowling suggested that this was a re-imposition of payroll tax, which the Government had pledged to abolish. However, it would be difficult for most people to distinguish the compulsory 8 per cent ‘contribution’ to the new scheme from payroll tax.” he said. References to the apparent success of similar schemes in Britain and Canada did not acknowledge that in both of those countries the funds were relatively new and that contributions were at most half of the proposed rate in New Zealand. “In Sweden, where a funded scheme has been running for some time, the Minister himself admits that, the fund has created political difficulties. In Canada the fund was entirely invested in public sector securities as a matter of principle. “Tax approvals which arcavailable in Britain are clearly defined and are not in a state of limbo as at present in New Zealand. Benefits available in the British state scheme are also more clearly defined,” said Mr Ellis.